In the early 21st century, Finland became known as the most revolutionary nation in terms of mobile adoption and integration into daily life. The home of electronics giant Nokia became the first country to implement mobile functions such as SMS banking, wireless payment of parking meters, access to government information, and other important public services made available years before the iPhone.
Over the last ten years or so, Kenya has been transformed into the “Finland of Africa” thanks to smart mobile initiatives such as M-PESA, which since 2007 has been showing the world how digital wallets are supposed to work. A couple of years ago, M-PESA was described by leading financial publication The Economist as the most successful mobile system for personal finance in the world, and it explained the convergence of factors that led to its success being adopted by Pakistan and even some Eastern European countries.
M-PESA inspired M-Kopa, an empowering system of residential solar panels, lights, and mobile device charging units for Kenyan households that are not connected to the electrical grid. M-Kopa kit purchases can be financed and managed through M-PESA. There’s also M-Shwari, which builds upon M-PESA by bringing some traditional banking features to smartphones.
In Swahili, Akiba Means Savings
Now comes M-Akiba, a Kenyan government bond that is meant to be purchased, managed, and traded via smartphones. This may not seem like a big deal to investors in nations such as the United States, where smartphone users can install mobile apps for comprehensive Wall Street trading; nonetheless, this is a good move for the M-PESA Kenyan crowd to be introduced to the world of sovereign debt and financial exchanges.
The minimum M-Akiba investment is 3,000 Kenyan shillings, about USD $30. The bond yields ten percent payable every six months, which means that the entry-level M-Akiba bond will pay investors a couple of dollars per year, and in three years they get back their initial investment in full. The risk/reward ratio should be calculated by keeping in mind that this is a highly publicized bond issued by the government, which means that every effort will be made to ensure that interest is paid in a timely fashion and that investors will be made whole when the instrument matures in 2020. When the Kenyan Treasury announced M-Akiba, more than 100,000 mobile users signed up, but less than 6,000 actually purchased a bond; this may have been due to the system going down for 24 hours, but such growing pains were also experienced in the early days of M-PESA.
Naysayers are saying that M-Akiba may not be for all Kenyans, and they may be right: parting with $30 is easier said than done. But there is more to this initiative than just selling bonds. First of all, extending the idea of Kenya as “the Finland of Africa” is a point of pride; second, M-Akiba is giving access to Kenyans who would not have dreamed of owning an instrument traded on the Nairobi Securities Exchange; finally, a bond means savings, and this is a security that may rise in value, therefore giving bondholders a chance to profit before maturity.